Article | Creating Resilience, Future Cities

What the experts are planning for obsolete office buildings

There is a rising focus on adaptive re-use in our major CBDs as owners look for ways to reimagine – rather than demolish – older office buildings to make our cities more dynamic.

October 9, 2023

The images shows a empty office space that can be adapted for another purpose.

What are some of the solutions for ageing or obsolete office buildings? It’s a question being debated globally, as landlords and policymakers grapple with ways to create more 24/7 cities, solve for a chronic undersupply of housing and deal with the carbon emissions involved in new construction projects. 

Against this backdrop, a growing number of building owners - both in Australia and globally - are turning to adaptive re-use, choosing to repurpose existing buildings in favour of doing a knockdown rebuild. 

As Nathalie Palladitcheff, the Chief Executive Officer of Canadian real estate company Ivanhoé Cambridge, is known for saying, “The best building for the planet is the building that you don't build”.  

So, what is the potential in Australia? And what could some of the benefits be?  

Turning the old into new  

Replacing offices with apartments is one of the key areas being examined given the ongoing supply issues in our major cities. 

Design studio Hassell recently completed a comprehensive audit of the Melbourne CBD on behalf of the Property Council of Australia, identifying that 86 buildings are ripe for adaptive reuse and could create up to 12,000 new homes. 

Ingrid Bakker, the Principal and Commercial & Workplace Sector Lead at Hassell, says identifying buildings with the right scale and dimension to suit apartments is the key to ensuring adequate natural light and ventilation.  

And that magic number is 24. 

“You hear a lot of people saying you can't convert offices because the floor plates are too big and too deep, and you won't get enough natural light. And that's true, you can't with a lot of office buildings. But if a building is around 24 metres wide that’s perfect for two apartments complying with the Better Apartments Design Standards in Victoria or the Apartment Design Guide in New South Wales,” Bakker notes. 

“So, if you do two metres of balcony, nine metres of apartment, two metres of corridor, nine metres of the other apartment, and then the balcony again, you get this magic number of 24.” 

Before completing the Melbourne audit, Bakker says she initially thought there might be half a dozen suitable buildings, but a total of 86 were identified. 

Even discounting that some of these wouldn’t be workable projects, being too close to other buildings or not having enough access to natural light, and by just focusing on 40 of those 86 buildings, Hassell arrived at the conclusion that these could deliver 10,000 to 12,000 new CBD apartments. 

Notes Bakker, “That's when we started to understand the scale and potential and what that could do to the city to really add some life. The key to activating cities is having that 24/7 city and that passive surveillance that residential gives you to keep it safe.” 

It’s a conversation happening around the world, with Hassell talking to groups in Singapore, Brisbane, Sydney, Perth and San Francisco. 

“It depends on the planning conditions in each city. And some cities obviously allow more height or more density than others. And that's something that we're looking at as we move through the different locations to see whether this can work in different cities,” Bakker says. 

David Harding, the Executive Director of Business NSW, is a passionate advocate of adaptive reuse to help create 15-minute walkable cities. And not just by converting office towers to apartments but by considering a range of other uses 

“We need to bring all of the generations back into our cities. We need to have them pumping all the way through the weekend. We need to have people in the streets through the night in a safe kind of environment. And for that we need to have more mixed-use towers,” he says. 

“We're proposing from Business NSW, and we've been on this for a long time, that we just need to lift the planning regulations to allow invention, to allow innovation, to allow that reinvestment to come in and whether it's educational space, whether it's medical space, whether it's research space, whether it's advanced manufacturing, whether it's luxury housing or whether it's affordable housing for key workers, we need to look at them all.” 

That’s something that’s already happening in London, with some empty office space being converted into hotels, life sciences space and apartments.  

Zoe Bignell, head of CBRE's UK Development Advisory Business, says this is being driven by an ongoing occupier flight to quality, which is hastening obsolescence in a growing proportion of the London office market, as is the cost involved in transforming older commercial stock into better quality office space. 

However, she stresses that not all second-hand office space can be converted to an alternative use even where there is a willingness, and that planning considerations are critical. 

She points to the Central Activity Zones in London where the local planning authorities are endeavouring to protect employment uses. 

“There’s a concern that if the use flips from employment to residential, but the employment cycle comes back and there's more demand for offices, have they mitigated their ability to respond to that in the future. So there's this real conundrum around trying to expedite housing to deliver on that housing crisis, but also not be in a position where you have a future growth in employment in the future,” Bignell said. 

While she acknowledges that there’s not one easy solution, she believes it’s a case of balance. 

“We have some clusters of office space that work really well. We have regeneration sites in London where you can weave in commercial accommodation to help bring in that employment level necessity. My main theme at the moment in speaking to these regulatory bodies is that there's not a one size fits all approach to planning that's going to work. You need to be agile and respond to what developers and end users want. Because the most important thing here is not having buildings that are obsolete because that stymies your high street or your townscape.” 

Bakker has been involved in similar discussion with the City of Melbourne and the Victorian Department of Planning, who she says are keen to understand what needs to be done to unlock any potential issues or to get rid of hurdles. 

“They're open to discretion around some of the current planning codes and also to the apartment design guidelines and looking at each site for its merit. And we did a couple of examples to show what would happen if you complied with the current planning scheme and then what would happen if we had some discretion and we were able to demonstrate that you'd get much more efficiency, a better building, if you did have that discretion.” 

In addition to planning, Bakker believes being able to put a value on the value on the embodied carbon in older-style buildings – something that’s currently not possible – will be one of the critical ways to help accelerate adaptive reuse in our cities, incentivising developers that choose to reuse the existing carbon in a building. 

“I think until there's some kind of value put on the reuse of the structure we'll be in an uphill battle. A lot of the cities around the world have net zero ambitions, with Melbourne having a very aspirational target of net zero by 2040. We're not going to get there if we don't reuse the embodied carbon that we already have."  

Harding would meanwhile like to see a rezoning of major portions of our old-style CBDs into a new definition of mixed use.  

“We need to lift the lid on the innovation, let the investment come back in, let the creative people like Ingrid loose, with much less constraints in a world that needs to be much more nuanced, much more resilient and frankly bring a lot more colour to our towers.” 

You can listen to more insights about the potential for adaptive re-use in this Talking Property with CBRE podcast.